The Mining Play

Cerro/Medinah/Auryn- 2018 Q2 General Discussion ⛰

New Quarter. Happy Easter!:hatching_chick:

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Well Easter is out of the way and so is April fools day except for those in NJ looking at another snow fall. Crazy weather, and hopefully in the next 14 days we will have both the CDCH and the MDMN YE financials! I am very curious to see how they are going to fund CDCH going forward and how they are going to clean up and items left in MDMN I believe there is still one lawsuit on the books against MDMN.

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Karl, we will know soon enough on financials and everything else in time. Thanks for your posts and thoughts.

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Cerro’s Annual Report. Looks like the big transaction didn’t actually occur until first quarter 2018 so this report says very little and of course Auryn keeps its secrets hidden behind a curtain. I assume the actual financial statements to follow later today.

https://backend.otcmarkets.com/otcapi/company/financial-report/190138/content

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The management change was effective Nov 10, 2017
The closing of the property exchange was Dec 15, 2017, when they announced it.
The new shares which were part of the property exchange were approved in Q4 but issued in Q1

So the overall transaction did not complete until sometime in Q1

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Yes It appears the deal was completed on December 15th but the stock was not issued until a latter date. So does our one year holding starts on December 15th or on the latter date in the first quarter?

No income statement, no balance sheet, no cash flow statement, no executive compensation,and etc. So I do not see how this is a complete financial statement!, Also no copy of the purchase agreement!

The one items that seems a little confusing is the issuance of the 500,000 preferred shares.

The Company authorized, but did not issue until 1st Quarter 2018, 500,000 shares of preferred stock to an entity in exchange for providing a loan related to the Company’s retention of its 5% interest in Auryn Mining Chile, SpA.

I thought they indicated on December 15 they issued common stock for the forgiveness of the Loan?

Prior to the purchase agreement being exercised Cerro issued 38,380,936 common shares to satisfy its
$300,000 debt to AURYN Holdings Corporation

Another interesting item is that they prepaid legal expenses with stock for 2018!

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Also interesting:

Maurizio A. Cordova - As of 1st Quarter 2018, Auryn Mining Chile, SpA, owns 95% of the 7,000,000,000
issued and outstanding common stock of the Company, which shares were approved by the Company
in December 2017. Maurizio A. Cordova owns 65% of Auryn Mining Chile, SpA.

It does not say that Maglas owns Auryn Mining Chile !

I’m interested to hear your thoughts on all of this Karl?

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Not enough information. In my opinion it raises more questions that need answering.

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Seems like that part hasn’t changed from previous regime. I work in large business and bottom lines. Our bottom line is a spiraling down pps since Auryn took over.
Yes, Les diluted the co but he is walking free right now after stealing millions. That dilution should have cut us in half.
I really thought these guys would be transparent!

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I believe these are the same 500,000 preferred shares that the Day brothers received for negotiating the return of the 50% interest In CDC that we did not own. Subsequently the one brother, Christopher?, was charged by the SEC and had to relinquish his 250,000 preferreds. Patrick Day retained his 250,000 preferreds until the transaction with Auryn for the $300,000 loan by AHC. I believe as part of the deal, Patrick had to give up his 250,000 preferreds to AHC along with the other 250K sitting in treasury. These preferreds were issued to AHC in 2018. These preferreds had 1,000 for 1 voting rights to assure that unfriendly shareholders could not cause us harm.

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Well, the old YIELD sign is back. Probably not for long?

https://www.otcmarkets.com/stock/CDCH/overview

Thanks and that is fairly accurate from what I recall. I do recall that these preferred shares were going to AHC for the loan. but they were first return to CDCH and not re-issued until Q1 2018 ( I assume it went to AHC)? That is the confusing part,.especially since the loan was eliminated with the issuance of the 38,380,936 common shares prior to December 15th 2017 so why does AHC still get the prefferred stock? I believe these shares should be returned to CDCH. I see no reason for them to be reissued to AHC in Q1 after the loan has been repaid in December 2017. It simply does not add up. .

Also it would be nice to know from the previous CDCH financials what happen to the Greg Chapin shares and the Les Price Shares.

Gregory A Chapin Common 6%
Medinah Minerals, Inc.† Common 6.5%

†The shares represented by this 6.5% interest have been transferred to Medinah Minerals from Les Price
as part of a global settlement with Mr. Price, but as of the date of this report, Medinah has not yet
executed all documents required to formally complete the transfer of the Price shares into its name.

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Other than the issuance of the stock to complete the transaction, the property was actually transferred to CDCH on December 15.

" On December 15, 2017, following the Closing set forth above, the Company closed its acquisition of all of the mining concessions of Auryn, pursuant to an Asset Purchase Agreement of the same date."( which was promised to be provided)

So why in the world isn’t there a balance sheet. I would expect to see a value for that assets transferred, plus also any value for the work that AURYN has done to date on the transferred property.

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Thank you Karl! Same ole story with these guys. Now we have a Yield sign back up. We need answers from you Cordoba Not more questions.

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It is unclear to me also who the “entity” in the Annual Report is actually referring to or which group of individuals (company directors as compensation?) have been issued these preferred shares. My guess is that it is not specifically AHC. AURYN needs to build it’s reputation if it is to become a sucessful publicly traded company in the future under present company management.

The Company authorized, but did not issue until 1st Quarter 2018, 500,000 shares of preferred stock to an entity in exchange for providing a loan related to the Company’s retention of its 5% interest in Auryn Mining Chile, SpA.

The preferred shares were originally created as control shares that also act to assure a quorum was present at the last couple of sparsely attended Annual meetings. It’s pretty much a non-issue except for transparency, IMO. Since AURYN (actually, “Maurizio A. Cordova owns 65% of Auryn Mining Chile, SpA”) and AURYN has 95% of CDCH stock issued, there is little doubt as to how shares will be voted for any future company actions requiring a vote. When all of the MDMN and AURYN ownership shares are allocated and unrestricted, the share count is “right-sized” accompanying a new company name and ticker we (the unrepresented minority shareholders) will sorely need a code of ethics for the new company. I don’t expect Sarbanes Oxley applies, but the following excerpt outlines some clear principles that could be followed in an amended (or new) bylaws for the newly named company:

What Specific Provisions Are Required in the Commission’s Code of Ethics?

While many companies have codes of ethics, the Commission’s code pertains only to employees of public companies who have financial disclosure-related responsibilities. Item 406 defines a code of ethics as "written standards that are reasonably designed to deter wrongdoing and to promote:

  • Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
  • Full, fair, accurate, timely, and understandable disclosure in reports and documents that a company files with, or submits to, the Commission and in other public communications made by the [company];
  • Compliance with applicable governmental laws, rules and regulations;
  • The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and,
  • Accountability for adherence to the code."

Each of these five elements is examined below.
http://corporate.findlaw.com/law-library/corporate-ethics-and-sarbanes-oxley.html

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Why can’t the co just tell us instead of shareholders having to speculate?
Nothing has changed in this regard.
Also, if some Auryn claims were sold at auction because of not paying taxes, that is a material event and shareholders of cdch have every right to know.
We don’t know if they are worthless or not but some will speculate.

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The filing is pretty clear on these topics. See page 6:

In early 2017, Auryn announced a cash call, which based upon the Company’s 5% holdings, required a further investment of$300,000 in order to maintain the Company’s 5% holdings in Auryn. At the Company’s Annual Shareholder Meeting, held on June 5, 2017, the Company approved an offer from Auryn Holding Corp (“Auryn Holding”), a separate but related entity to Auryn, to loan funds to the Company for purposes of satisfying Auryn’s cash call, in the amount of $300,000, pursuant to a no interest loan, and in consideration of such loan, 500,000 shares of preferred voting stock of Cerro, which carry with them 1000-for-1 voting rights, would be delivered to Auryn Holding, and new management would be appointed

The preferred shares are the 500,000 1000:1 voting preferred shares that have been discussed many times in the past. Auryn Holding has been assigned these shares. Auryn Mining Chile,SpA, which previously owned the claims, now owns 95% of the 7B CDCH shares in exchange.

And finally:

  1. Maurizio A. Cordova owns 65% of Auryn Mining Chile, SpA". It seems pretty clear that this must be through Auryn Holdings since obviously Maurizio would maintain voting control while this was all being sorted out only by controlling Auryn Holdings, which owned the preferred voting shares

  2. Medinah owns 26.469% of Auryn Mining Chile according to their Q3 2017 filings.

  3. CDCH owns 5% of Auryn Mining Chile

  4. And according to the Masglas site, “MASGLAS also is a controller, significant shareholder and/or management partner in: AURYN Mining Chile SpA”. So Masglas must own some or all of the other 3.5% of Auryn Mining Chile (perhaps through Auryn Holdings) plus whatever they may own indirectly via ownership of MDMN or CDCH stock

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I agree. Thanks for the clarification. My point which I’ve made before is that the major backers of MASGLAS are the same “group” (substitute “entity”) that formed and runs AURYN (controls AHC). This group of individuals are essentially the current management of both CDCH and MDMN. Preferred shares are commonly used (awarded) as compensation. There is no advantage to identifying each individual as we know it is to this “entity’s” (these individuals’) interest that AURYN succeeds in forming a new and successful publicly trading company from Cerro Dorado shares. Shareholders of CDCH and MDMN shares will need to be transferred into individual shareholder accounts before this can occur. It appears to be a multi-step process to me.

All shareholders of AURYN will be treated equally as we move forward with our intention to access the public markets and provide eventual liquidity to all shareholders.

There have been few details since that statement was made last September. Transparency is difficult with more than 50 percent of the corporation’s outstanding voting securities being directly held by non U.S. residents to move directly into the US markets until it sequentially meets the requirements of all US security laws. Currently, CDCH owns claims to the properties, but it is AURYN that is continuing to execute its mining plan. AURYN is not a subsidiary of MASGLAS although there is a very close relationship. I would consider AURYN to be shown as the privately held “parent” company when the time comes to move to a higher tier or exchange.

Think about it: if a subsidiary went public, that would mean that its shares were being offered to the public, instead of all being owned by the parent company, and so it would no longer be a subsidiary.
https://www.quora.com/When-a-parent-company-goes-public-does-that-mean-the-subsidiary-company-also-goes-public-What-does-this-mean-for-the-equity-of-the-subsidiarys-employees

Keep in mind AURYN is planning ahead for the future to move up to a higher exchange and will likely have to eventually meet conditions as a foreign issuer which includes detailed financials and much greater transparency. That time is apparently not right now. Shareholders of MDMN and CDCH do not have shares of MASGLAS. This was discussed quite some time ago when it was 1st announced that AURYN intended to list on the OTCQX or OTCQB. Once we are “transformed” and off the pink-sheets we will need much more transparency and could benefit greatly from a clearly stated code of ethics in our new reformed by-laws.

At the end of year (DEC 15) AURYN as majority owner of CERRO clearly stated it’s goals for the company:

As the majority owner of Cerro, we look forward to working with current Cerro management. This includes the following:

  • Creating a management team and Board of Directors suitable for an exploration company intent on becoming a junior and major mining company.
  • Launching a massive exploration program on the Altos de Lipangue mining district including entering JV agreements with companies that have the specific expertise necessary for exploring and mining the variety of targets we believe we have in the district.
  • Focusing our resources on becoming an active gold producer by reopening the Fortuna gold mine and actively exploring and mining the gold veins found in the Larissa tunnel.
  • Subject to regulatory approval, consolidating the capital structure, changing the name of the company, and moving to a higher exchange or tier on the OTC.

Keep in mind that the Annual Report is not required to report 2018 Q1 events until June 30. There appears to be unresolved issues influencing complete reporting including those remaining issues with MDMN. JMO

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Unfortunately this is a sucker’s game, as is usually the case for retail investors. When many people made their original investment the “asset/pie” was large and full of potential. Over time, fraudsters like JJ, Les, and indirectly Chapin started taking pieces of the pie without adding any value. One could argue that AMC bailed us out of near death inevitability but they did so by taking another 70% of an already depleted pie without offering much of anything, from monetary standpoint, in the process. Yes, we are in better hands with operators who are way more likely to ultimately find value in the asset but, as we now see, they are also strapped for capital. The fact that our interest was dilutable (see: capital call) was the first sign that, once again, the average investor received a raw deal.

I’m hoping the financials are able to illustrate exactly how much AMC has spent on the project in return for their majority control. Is 30% of something better than 100% of nothing? Of course. Does AMC deserve “sweat equity” for trying to move thing forward? Of course. However, if we are going to be diluted each time additional money is needed for capex, as is currently the case, the pie is going to keep getting smaller for the retail investor.

Anybody looking for a moderate ROI at this point needs to be comfortable that the “asset” will exceed $500M in value. This could result is a 5-10x bagger which is about inline with comparable projects with similar risk profiles. The market for junior miners continues to be challenging. A $500M valuation is extremely difficult to achieve but, like many here, I’m betting thing in the precious metals space get materially better. Here’s to hoping that AMC has at least defined the resource and entered the test/bulk mining phase by the time the market becomes more “hospitable”. The market will not pay attention until both hurdles are cleared.

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